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Crossfire Company segments its business into two regionsEast and West. The company prepared a contribution format segmented income statement as shown below: Total Company East

Crossfire Company segments its business into two regionsEast and West. The company prepared a contribution format segmented income statement as shown below:

Total Company East West
Sales $ 1,140,000 $ 760,000 $ 380,000
Variable expenses 855,000 577,600 277,400
Contribution margin 285,000 182,400 102,600
Traceable fixed expenses 144,000 63,000 81,000
Segment margin 141,000 $ 119,400 $ 21,600
Common fixed expenses 72,000
Net operating income $ 69,000

Required:

1. Compute the companywide break-even point in dollar sales.

2. Compute the break-even point in dollar sales for the East region.

3. Compute the break-even point in dollar sales for the West region.

4. Prepare a new segmented income statement based on the break-even dollar sales that you computed in requirements 2 and 3. Use the same format as shown above. What is Crossfires net operating income (loss) in your new segmented income statement?

5. Do you think that Crossfire should allocate its common fixed expenses to the East and West regions when computing the break-even points for each region?

1. Compute the companywide break-even point in dollar sales.

2. Compute the break-even point in dollar sales for the East region.

3. Compute the break-even point in dollar sales for the West region.

(Round intermediate calculations to 2 decimal places)

Break-Even point
Dollar sales for the whole company
Dollar sales for the East region
Dollar sales for the West region

Prepare a new segmented income statement based on the break-even dollar sales that you computed in requirements 2 and 3. Use the same format as shown above. What is Crossfires net operating income (loss) in your new segmented income statement?

Total Company East West

Do you think that Crossfire should allocate its common fixed expenses to the East and West regions when computing the break-even points for each region?

Yes
No

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